2014 (7) TMI 396

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..../s. Sam Turbo Industries Ltd. [Appellant N o.1] is engaged in the manufacture of Power Driven Pumps and Parts of Power Driven Pump classifiable under sub-heading no. 84138000 and 84139900 of CETA, 1985. Appellant No.1 was purchasing MS Scrap from M/s. Chennai Steels [Appellant No.2], a registered dealer. A Show Cause Notice dated 24.08.2009 was issued proposing to disallow Cenvat credit availed by Appellant No.1 on MS Scrap during the period from Jun.'05 to Sept.'06, which was fraudulently paid by the registered dealer, namely, M/s. Chennai Steels. The adjudicating authority confirmed the demand of Cenvat Credit of Rs. 8,88,932/- along with interest and imposed penalty of equal amount on the Appellant No.1 and also imposed penalty o....

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....ction under Rules 25 of the Central Excise Rules, 2002 for contravention of Rule 11(2) of the said Rules inasmuch as they have issued Cenvated invoices fraudulently knowing fully well and the credit taken did not pertain to the goods sold. He submits that as revealed from the adjudication order, the penalty was imposed for contravention of the provisions of Rule 9 of the Cenvat Credit Rules, 2004. It is submitted that the Show Cause Notice proposed contravention of Central Excise Rules and adjudicating authority imposed penalty for contravention of Cenvat Credit Rules, which cannot be sustained, because, both the Rules are totally in different context. In other words, violation of Cenvat Credit Rules cannot apply to Rule 25 of the Central E....

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....e Tax, Coimbatore reported in 2013-TIOL-1202-CESTAT-MAD. He also relied upon the decision of the Hon'ble Punjab and Haryana High Court in the case of Vee Kay Enterprises Vs Commissioner of Central Excise 2011 (266) E.L.T. 436 (P&H). He further submits wrong quotation of the rule would not vitiate the imposition of penalty. 6. After hearing both sides and on perusal of the records, I find that appellant no.1 purchased MS scrap accompanied with Central Excise invoices issued by appellant no.2 registered dealer. There is no dispute that the appellant no.1 recorded the inputs in their Cenvat register and also utilised MS Scrap in the finished goods. This fact was confirmed by Shri T. Srinivasan, Director of appellant no.1 in his statemen....

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....alysed through monitor; that no test reports were maintained. 7. It is seen from the statement of Shri Surbudeen, Proprietor of M/s. Chennai Steels that in some cases they have supplied the invoices without materials. It is also stated that they have received the MS Scrap and supplied to the manufacturer. At any event, it is seen that appellant no.1 purchased the MS Scrap, as per the purchase order properly accompanies with Cenvated invoices mentioning as MS Scrap. Thus, there is no dispute that appellant no.1 received MS Scrap as mentioned in Cenvated invoices. In the case of R.S. Industries (supra), which is upheld by the Hon'ble Delhi High Court. The Hon'ble Delhi High Court dismissed the Revenue's appeal where the invoice....